Bills advance to protect municipal utility customers


News Analysis

The Florida Legislature is moving two bills through committee that would clamp down on how municipal-owned electric, water and sewer utilities use money derived from customers who reside outside the city limits.

House Speaker Pro Tempore Chuck Clemons of Alachua County made this issue a priority on the Energy, Communications and Cybersecurity Subcommittee he serves on because the issue hits home for his constituents.

Outside-the-city electric customers served by Gainesville Regional Utility (GRU) are facing even bigger problems than Vero Beach Utilities customers were in the summer of 2009 when rates soared, and that fall when city officials first invited Florida Power & Light to talk about purchasing the aging utility.

Dicey power generation investments, massive transfers into the general fund and punishing rate disparities drove Clemons to ask for two meetings just on the topic of municipal-owned utilities before the 2023 session opened.

Indian River Shores and South Beach utility customers spoke before Clemons’ committee and reminded legislators that the plight of ratepayers is a statewide problem – and not to forget about water-sewer customers.

Other members of the subcommittee relayed how they’ve heard from constituents in unincorporated areas from some of the poorest communities in Miami-Dade County to semi-rural areas to pricey suburban developments across Florida who are not happy with their monopoly utility provider.

The three top complaints are surcharges on outside-the-city customers, transfers of utility rate revenues into the owner-municipalities’ general funds, and the lack of regulation, with locally elected non-utility-experts making very expensive decisions about plants and other investments – sometimes to the detriment of ratepayers.

Clemons’ local bill targeting the Gainesville crisis takes a pretty drastic approach.

Under Clemons’ bill, the management of GRU will get taken over by an utility authority with members appointed by Gov. Ron DeSantis. That bill would not impact Vero Beach as it’s strictly a “local bill” filed to address a geographically targeted problem. But it would be interesting to watch what action the appointees take, and whether it brings down the rates.

For municipal utility customers outside Alachua County, a separate House Bill 1331 with broader potential implications for Vero, Indian River Shores and unincorporated South Beach water-sewer customers was set to be heard this Tuesday before the subcommittee.

The bill, filed by Rep. Demi Busatta Cabrera of Coral Gables aims to do four things:

  • Bring municipal utilities which serve customers outside the city limits under the regulation of the Florida Public Service Commission.
  • Require a referendum of all utility customers to approve surcharges on customers outside the city limits, and on transfers into the municipal owner’s general fund.
  • Decrease the percentage of any general fund transfers on a sliding scale as the ratepaying community outside the city limits grows, in proportion to the number of inside city ratepayers.
  • Prohibit municipalities which use utility revenues for non-utility related purposes from benefiting from taxpayer-funded grant and loan programs.

However, the bill language is vague and leaves an awful lot of questions unanswered. It would be tough for cities to know how to comply, and some sort of lengthy, costly court challenge is almost guaranteed.

Indian River Shores Mayor Brian Foley, who traveled to Tallahassee to address the subcommittee in January, said he’s concerned about how things will get inserted into the bill as part of compromise negotiations to win approval as the bill progresses through the various House committees.

“You start out with a horse and you end up with a camel,” Foley said, adding that he’s pleased that a bill has been introduced in the House, and a matching bill floated in the Senate. Foley said he realizes the bill is quite ambitious, and that realistically it might not successfully run the committee gauntlet this session. The subcommittee staff has not published an analysis of the House bill yet on the committee web portal.

Utility activist and CPA Glenn Heran, who worked on the Vero Electric sale for a dozen years, said: “They should keep it as simple as possible. A cap on surcharges, or no surcharges, and no transfers into the general fund.”

Vero Beach used to transfer $5.6 million from its electric utility to pad the city’s general fund, plus another nearly $3 million in administrative transfers to pay for City Hall operations. The Vero water-sewer utility transfers more than $3 million in direct and administrative transfers, and that amount is set to rise roughly 15 percent each year, compounded, from 2023 to 2026 due to steep rate increases, as the transfers are a set 6 percent of revenues.

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